Tuesday, October 20, 2009

Inflation in Check, Education Costs Keep Soaring

According to Joseph Pisani of CNBC News, the cost of attending a four-year nonprofit private college increased 4.3 percent in the 2009-2010 academic year compared to a year ago, bringing the average annual price to $35,636. Meanwhile, over the past 12 months, the Consumer Price Index (a measure of inflation) actually decreased 1.3 percent.

Growing at an even greater rate was the cost of going to a public college. Public in-state college costs rose 5.9 percent, bringing the average cost to $15,213. Out-of-state students saw their costs rise 6 percent to $26,741, according to the College Board, a non-profit association of schools, colleges and universities. (All costs include tuition, fees and room and board.)

Interestingly, one reason college costs continue to measurably outpace the rate of inflation is because schools are suffering severe drops in their endowments due in large part to the financial crisis. Some of the largest endowments in the U.S. at places like Harvard, Princeton and the University of Michigan have suffered declines of over 20 percent during the fiscal year that ended June 30, 2009.

Of course, Ben Franklin's word still ring true: "an investment in education pays the best interest." In fact, over a lifetime a high school grad earns an average of $1.2 million, while a college grad earns $2.1 million. Consequently, it is more important than ever to sufficiently plan for college tuition costs. Speak to an independent fee-only financial advisor to ensure you are taking the right action to be sure you are ready when your student is ready.

No comments: